Steep car prices, costly auto repairs, and ever-increasing insurance premiums are pushing budgets to a breaking point. Consumers are responding by comparison shopping for auto insurance more than ever before, research shows.
Car insurance costs have climbed 42% in the last two years, according to Insurify’s auto insurance report. Maryland, New York, and Washington, D.C., are the most expensive places for car insurance, showing that high rates aren’t just a problem in states facing hurricanes and wildfires.
These are “unprecedented times,” Chris Rice, vice president of strategic business intelligence at LexisNexis Risk Solutions, said at a recent webinar about trends in auto insurance shopping. Nearly half of auto insurance policyholders shopped for coverage in the last 12 months, he said.
“A lot of those rate-driven shoppers are people who haven’t shopped for insurance in 20 or 30 years,” Rice said. “I know my grandmother shopped, and she’d been with her agent for 30 years … but it’s been such sticker shock.”
Is frequent car insurance shopping the ‘new normal’?
Though it’s not the only factor, panelists agreed that rising auto insurance rates are a driving influence behind insurance shopping.
In 2024, car insurance costs grew by 10% in Arizona, 21% in Georgia, 9% in Florida, and 15% in Texas, according to Insurify data. Florida and Georgia were already among the top 10 most expensive states for car insurance.
By mid-2024, four states had comparison shopping rates exceeding 50%: Arizona, Florida, Georgia, and Texas, according to LexisNexis.
In August, LexisNexis reported which states had growth streaks for shopping and the number of new policies. Florida, Texas, and Michigan had the largest increases for both categories based on the number of drivers.
New York and California ranked in the top five, according to LexisNexis. Insurify data shows both had significant auto insurance rate hikes in 2024. Rates in New York grew by 14%, but California drivers saw a shocking 48% increase.
John Leach, a licensed insurance agent with Insurify, said it makes sense that drivers are shopping for auto insurance at such high rates.
“It makes sense that more drivers are reshopping for car insurance to lower their rates,” he said. “Many factors affecting car insurance costs are harder to change or are even fixed, like where you live, your age, your credit history, and how much you need to use your car. We’ve found drivers can save up to $1,025 per year by comparing quotes with Insurify, so reshopping really is a proven way to save money.”
Insurify predicted that rate increases will slow in 2025, but Florida, Georgia, and New York will see the fastest cost increases.
Could leading with ‘empathy’ make a difference?
David Blades, associate director of the credit rating criteria, research, and analytics department at AM Best, an industry ratings company, said strong customer service and reliable claims handling are key.
At the end of the day, “all insurance is a promise to pay,” he said.
Insurers that respond to disasters by making plenty of agents available to help and give straight answers about why costs are increasing will do the best with policyholders, Blades predicted.
“I think the companies that are responding the quickest, with the most hands-on responses, and that are having empathy for those folks, they’re going to give their customers the kind of customer experience from a claims handling perspective that they need and want, to fortify that customer experience and maybe keep those people longer even if they have to deal with the question of higher rates,” Blades said.
Experts agreed that home insurance rates are also contributing to the surge in auto insurance shopping, specifically among customers who bundle their vehicle and home insurance policies.
“We’d be remiss if we didn’t talk about all the rate increases and non-renewals on the homeowner’s side [and] carriers pulling out of states completely,” said Rice. “That’s driving shopping and switching as well. All of a sudden, a bundled customer … potentially can’t be a bundle anymore.”
What’s next: Increased shopping is more than a trend
Blades believes frequent auto insurance shopping could become more of a typical behavior, especially given the aging U.S. population.
“People are getting older,” he said. “More people who are longtime, loyal customers might be on fixed incomes and have to [face] some of those tough choices.”
Rice said that while the overall distribution of policy length still skews toward 10-plus years, there’s been a dramatic shift. Insurers are seeing more one-year policies and fewer longer-tenured customers.
Rising rates are pushing drivers of all ages to shop for auto insurance to find a better price. And insurers are losing consumer loyalty as a result.
So, is this a true industry shake-up? Rice isn’t quite sure yet.
“I don’t think we’re at the place where it fundamentally changes the business model, but we’re in a place where we’re taking note of it,” he said.
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